On the morning of 1 October 1861; the Federal tug USS Fanny, which was a single mast (with sails), single funnel screw steamer, armed with a fore and aft deck gun and a crew of forty-nine (to include officers); set out from Fort Hatteras with cargo full of ammunition and supplies (which included drinking water).  She also had a sawyer gun and twenty-four men of the 20^th Indiana.  While en-route she was spotted by the “Mosquito Fleet” commanded by Captain William F. Lynch, CSN; which consisted of the CSS Curlew, CSS Raleigh and CSS Junaluska.  The Mosquito Fleet trailed the Fanny, until she was offloading the supplies onto a small boat, when the three steamers approached from the west and opened fire with the Fanny being positioned some 2 ¾ miles off shore.  The Confederate ships never scored a hit against the Fanny, while the Fanny managed to get off eight or nine shots, with only one being effective, but Captain Hart of the Federal tug panicked while believing he was outgunned, ordered a white flag of surrender to be hoisted.  Captain Hart resisted the opinions of his Junior Officers to scuttle the ship and throw the guns overboard.  As a result the Fanny became the first Federal warship to be captured in the Civil War, which the supplies that she carried where greatly appreciated after they were re-appropriated to the Southern Army.

Several soldiers of the 20^th Indiana were taken prisoner onboard the Fanny, and were interrogated by their Confederate captors, the exact location of Camp Live Oak was learned.  The captured Hoosier soldiers were incarcerated in the local county jail.  A hastily planned attack was planned for retaking the Hatteras Island, and the date was set for 5 October 1861.  The plan was for the 3^rd Georgia Infantry to make an amphibious landing north of Camp Live Oak, and the 8^th North Carolina Infantry to the south, eliminate the defenders at Camp Live Oak, and then march on Fort Hatteras.

Early in the morning of 5 October, the 3^rd Georgia disembarked their ship and began wading through the waters towards the beach, as the 20^th Indiana formed their color line.  Unfortunately, Colonel William L. Brown threw away his one and only chance of eliminating the men of the 3^rd Georgia entirely from the Civil War, as he panicked and ordered his men to withdraw to Fort Hatteras.  What was initially supposed to be an orderly withdraw, turned into the “Chicamacomico Races” as the still green Hoosier soldiers (with empty canteens) ran in disarray discarding most of their equipment, and then their uniforms in the hot sun, as they struggled in the soft sand.  The 8^th North Carolina still onboard their ship, monitored the spectacle, as word reached Fort Hatteras of what was going on to the north.  The gunboat USS Monticello was immediately dispatched to provide cover for the retreating Hoosiers.  Once upon the scene the Monticello’s guns were immediately felt as their accurate and intense fire caused an immediate end to the Confederate plans on the island.  Some have noted that if the 8^th North Carolina had been landed, the Confederates could have surely been victorious in retaking Fort Hatteras.  In total the 20^th Indiana suffered 8 dead and 40 prisoners in both events.  The forty prisoners once exchanged were discharged from the Army on 22 May 1862.  However, the men of the 20^th Indiana went on to a distinguished career, gaining many accolades and earning the nickname the “Fighting 300”.

The Fanny would continue her service with the Confederate Navy, until 10 February 1862; when she was pursued by a Federal flotilla up the Pasquotank River, with the rest of her Confederate raiding force.  She was burned at Cobb’s Point, North Carolina to prevent capture.  As a side footnote, the Fanny was the scene for the first balloon ascent from a U.S. ship at Hampton Roads to observe Confederate batteries at Sewalls Point.  This action was “a small beginning for the potent aircraft carrier in the tri-dimensional Navy of the twentieth century.”